The DOD budget is out, and the news is good

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By John Keller
Editor in Chief

The Obama Administration’s military budget proposals for next year are out, and we can breathe a collective sigh of relief.

The aerospace and defense industry has spent months fretting about President Obama’s 2011 defense budget–more out of uncertainty than fear. It is this proposed budget, far more than the one last year, that gives us our first clear indication of how the Administration plans to treat defense spending, and the verdict is, better than we thought. The 2010 budget request for the U.S. Department of Defense (DOD) essentially was George W. Bush’s last defense budget. It wasn’t until the 2011 budget proposal was released that we saw how Obama wants to proceed with military spending. The numbers speak for themselves.

The overall DOD budget is $708 billion, which consists of $549 billion in the discretionary defense budget, and $159 billion to support continuing military operations in Iraq and Afghanistan. The discretionary DOD budget of $549 billion–which includes proposals for military personnel, military construction, and family housing, in addition to military procurement, research and development, and operations and maintenance–is an increase of $18 billion over the $531 billion enacted for 2010. This is an increase of 3.4 percent, or 1.8 percent real growth after adjusting for inflation.

Those top-line budget numbers, fail to convey the real story for the aerospace and defense electronics industry. To do this requires us to look closely at DOD budget for procurement, as well as the budget for research, development, test, and evaluation (RDT&E), because these budgets largely deal with current and future military technologies. The 2011 DOD procurement budget asks Congress for $137.48 billion, which is up only slightly–1.05 percent–from current-year procurement spending of $136.06 billion, yet the trend is clearly going in the right direction–particularly in light of concerns that the Obama Administration was looking to cut defense spending.

RDT&E is another story. The proposed military research budget for next year is $76.77 billion, which is down 5.13 percent from current-year spending of $80.92 billion, but was not as drastic a cut as it could be.

Now look at the combined procurement and RDT&E budget lines for military communications, electronics, telecommunications, and intelligence (CET&I) technologies. Next year’s CET&I proposed budget is for $17.45 billion, which is an increase of 3.2 percent from this year’s CET&I congressionally enacted spending levels of $17.45 billion.

This is good news for the military electronics and electro-optics industries. We can be on solid ground as we plan for the future. Barring unforeseen circumstances, we aren’t going to see substantial defense spending cuts over the next several years. President Obama’s agenda seems to revolve around domestic programs; for defense spending, it’s steady as she goes–at least for now.

Now we’re into an election year, and no one in the Administration or on Capitol Hill wants to rock the boat on defense spending and preparedness as we move closer to the congressional mid-term elections next November. Barring unforeseen circumstances, we are not likely to see substantial increases in defense spending over the next several years, yet we are not likely to see major cuts, either. I don’t see any end in sight in the “overseas contingency operations.” We’ll see a continuing solid market for advanced sensors, battlefield networking, optics and fire control, and new technologies that will be involved in counter-terror and counter-insurgency operations.

Everyone involved in the military technology business can get to sleep tonight, resting assured, that the Department of Defense is still open for business.

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Mil & Aero Magazine

February 2014
Volume 25, Issue 2
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